Trends in FinTech You Should Know About
The FinTech industry has never been developing so fast as it did in 2020. The pandemic forced many businesses to move online and the banking and financial sector isn’t an exception.
Banks and financial institutions had to reorganize their business models and switch to a more customer-centric approach, putting banking experience as a priority. It has become possible due to the implementation of the latest technologies and trends in their digital solutions.
FinTech demand is increasing rapidly and it becomes a determining factor for banks and financial institutions’ survival. In this article, we look into the latest FinTech industry trends that will help banks and finance-related businesses to stay on top in 2021.
Brick-and-mortar banking establishments were experiencing a significant decrease in customer flow due to the pandemic restrictions in 2020. The situation encouraged many banks to refer to software development for banking and financial services and build their own applications that helped to keep their customer rates at pre-pandemic times.
Although digital banking services were rising before the pandemic, they started flourishing in 2020. Building their own applications allowed banks to make their services more accessible. Now, bank customers can use real-time banking services through a variety of online channels on the go.
Another digital banking trend is shifting from paper-based banking towards online agreements, messaging, and notifications. This convenient means of communication made customers unwilling to come back to old-style banking services. Therefore, those banks that overlook the importance of developing their own applications might find it more and more challenging to attract new customers in the future.
Blockchain & Cryptocurrency
After being moderately active for more than two years, blockchain and cryptocurrency started regaining their popularity in 2020. Cryptocurrency users found out that switching to blockchain technology makes it easier to send and receive digital payments around the world at little to no cost with minimum banking regulations.
Another reason to switch to blockchain technology is that it provides resistance to any modification and secures money transactions. Many businesses started experimenting more with blockchain development and incorporating cryptocurrencies into their digital apps.
For example, Facebook has announced the launch of its Libra project, Facebook digital money. It’ll allow its users to safely exchange digital coins without the necessity to create their own bank account or have a credit card.
Rolling out of Libra has attracted much attention from potential investors and Facebook users and this trend will continue to develop.
RPA (Robotic Process Automation)
Robotic Process Automation (RPA) is the technology that allows to cut down the operational costs and lower human error rates. It results in faster operation times and enhanced customer experience.
Banks and financial institutions can implement RPA technology in a form of rule-based and structured actions. For example, they can automate account information processing and viewing, application status updates, and easy balance information checking. Automation of many banking processes allows banks to respond to customers’ requests in real-time, serve more users, and provide their services 24/7.
Artificial Intelligence & Machine Learning
Artificial intelligence (AI) and Machine learning (ML) are used for various purposes in FinTech solutions. They help banking and financial institutions provide high-quality automated services by quick data processing, enhanced security, like biometrics access, and service enhancements like personal digital assistant and customer support AI chatbots.
With voice assistants, FinTech can engage their customers more into the bank’s product by having a conversational service, excluding the need to write lengthy messages, and improving customers’ financial literacy by providing them with personal advice on how to better spend, save, or invest their fundings.
The digital transformation trend in FinTech and the appearance of digital payments, digital wallets, cryptocurrency, and digital currencies like Bitcoins, Litecoins, Namecoins, NXT, and others have increased the need for technology-backed banking.
Thus many banks and financial organizations started looking for FinTech software development services to create innovative apps and solutions that would help them increase market presence, help retain old customers and attract new ones. However, the process of new solution development from scratch is quite costly and long term. This has triggered the development of various financial and banking platforms and providing them as a service, known as FaaS and BaaS accordingly.
Various FinTech companies started offering their APIs to other players in the financial market allowing software developers to quickly build banking and finance-related apps with cutting-edge, secure, and tested functionality.
BaaS platforms are quickly developing and will be on the rise in 2021 and onwards. According to Aligned Market Research, BaaS platforms are going to reach their market size to $43.15 billion by 2026 globally at 24.4% CAGR from 2019 to 2026. The BaaS solutions are expected to help their users to find new revenue streams and better define their customers’ touchpoints. Read more on the rise of BaaS platforms